AOB

[BadarZ]

As I have seen on many different OTC/PK to higher exchange listings, they run up just before the listing, and then take a breather soon after. I expect a pullpack, or sideways trading for the next few days.

Thanks David, keep up the great work!

GL
BadarZ

[David Randolph]

Well, probably the market already expected AOBO.OB to move to the AMEX exchange and be AOB. So there was some sell on the news. In fact, a change in the exchange a stock is listed doesn't change the company's intrinsic value, does it?

Anyway, I didn't bought because of the listing on the AMEX, I bought because I expected a bullish breakout of the $1.84 resistance level (which indeed happened) and because of fundamentals, which indeed are attractive.

So probably yesterday was just a retest to the old resistance, now support. It won't be any problem even if the stock comes down below $1.84 to close the gap it left open between $1.78 and $1.82.

Expecting $2.48 to be reached soon.

[Michael]

Deleted as there was a mistake in the calculation of the PE values. Reprint with corrected PE values below 

[David Randolph]

What a wonderful piece of research we got from Michael on AOB. Thanks a lot, let me applaud you 

Technically the stock is perfect. Made a breakout because of the news it was moving to the AMEX (it would breakout anyway on fundamentals), came back down to test the new support (old resistance) of $1.84 (actually $1.85 and $1.86 were the low for the last 3 sessions, so clearly a support there) and then a rally.

The stock closed at $1.96, up 5% on the day, and I already see $2.48 on print.

[Michael]

If you thought that AOBO was about Chinese Tea and magic rhino powder you might want to take a second look at this company!

Did you know that AOBO has one of the few effective treatments against SARS (Shuanghuanglian Lyopilize Powder injectable) or that they have the only China FDA approved first grade prescription medicine to alleviate bed wetting and incontinence (Cease Enureses Soft Gel - never know when this will come in handy!)

These are two of a long list of products based on traditional Chinese nature medicine. In fact AOBO have one of China's top ten government certified brand (Three Happiness - not sure what government certified means but I guess it is a good thing!). This has helped the company to produce exceptional top line and bottom line growth (see chart below).

But it is not only about their products. AOBO is executing an expansion plan based on acquisitions. The Chinese Governments privatization policy of the pharmaceutical industry presents AOBO with the unique opportunity to acquire formerly government-owned quality pharmaceutical assets at low prices.

They have rapidly expanded the distribution network, which now includes more than 10,000 point of sales and are expanding their distribution outside China to include Taiwan, Japan, Korea, Hong Kong and Vietnam. They even opened an office in US recently focusing on penetrating the US market. I have high expectation to this move due to the general focus on nature medicine in the western world and specifically the buzz around Chinese medicine

I don't buy companies because I like their products, even though it helps. I buy companies because I believe they generate exceptional value for their shareholders which can contribute to my retirement plan.

So is AOBO going to cut a few years of my working life and add a few years to my life on a remote tropical island in the Indian Ocean? 

I believe so!

Their fully diluted PE for 2005 is 6.3 based on a conservative earnings forecast (8.5 ttm). This is cheap if you look at their growth. The revenue has tripled during the last 3 years and their profit is growing even faster. With their strong cash position they will be able to benefit not only from the growing Chinese market (China's green and organic market is valued at $8.6 billion) but also from their international expansion.

Let me finish this story with a quote from our Chairman and CEO:

"We continue to rapidly grow our product lines and distribution capabilities, both organically and through acquisition," said Tony (Shujun) Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, Inc. "Recently, we entered into a letter of intent to acquire Heilongjiang Qitai Pharmaceutical Limited ("HQPL"), a leading Chinese distributor of pharmaceuticals. The transaction will provide us, for the first time, with the ability to distribute our products throughout China because of HQPL's strong wholesale and retail distribution network, which should serve as a catalyst for future growth. We believe we are ideally positioned to continue to rapidly increase revenue and earnings."

I can already smell the Indian ocean!

[Michael]

when we can say goodbye to AOBO.OB and welcome to AOB. I have tried to put a
low purchase order in just to see if I can benefit from the confusion      

David remember to update the 3SOF portefolio with the new ticker. We can't have
a 100% loss on this gem!

Enjoy the feel of AMEX: http://finance.yahoo.com/q?s=AOB

Talking about starting with a clean sheet      

[David Randolph]

Yes, I'll change the symbol on the homepage right away 

[Tirebldr]

Confusion is right. On ScottradeElite I get a bad request when I look for AOBO.ob, And when I ask for AOB my chart just sits there dumbfounded as if it dont know what to do.
    Good luck today on all who are into AOB

[David Randolph]

Oooppss, the homepage got an -100% on AOB. But quotes are delayed 15 minutes, I hope it all gets straight a while from now.

[la-onda]

Michael,
what is your price target on AOB?

TIA
Oliver

[xiaoful]

David,

EDNE look very strong today! What do you think about the stock future?

Hope get your ideal as soon as possible.

[David Randolph]

I believe EDNE.OB is a scam, it will rise until one day, on a beautiful morning, it falls more than 50% on that day without warning.

I don't know where's the thread where I explain why ... please make a search. Anyway, if I was pumping the stock, I would make it close above $4.60 today to make a new relative high and bring in new buyers so I could dump it !

Good luck, be carefull ...

[Michael]

Michael,
what is your price target on AOB?

TIA
Oliver

Hi Oliver,

I think that Davids target of 2.48 is realistic short time but let me just do a little calculation just to show how undervalued this stock is:

The forward PE is 6.1 (fully diluted 2005)
The growth is 69%
The resulting PEG is 0.09

Here is a definition of PEG (which you of course know!):

PEG ratios, in various forms, are used by many analysts intent on buying "growth at a reasonable price." It is based on the notion that the ratio of a company's current stock price to its annual earnings, while useful, is an imperfect measure of the stock's real value. The PEG ratio is calculated by dividing the P/E multiple by the company's projected earnings per share growth rate over the next year. The theory is that if the resulting value is less than 1, the stock may be undervalued; if the PEG ratio is over 1, the stock may be overvalued. The farther from 1 the value, the stronger the signal. Some analysts consider a 140% ratio as overly generous -- they might look to pare their holdings in a stock as soon as its price multiple exceeds its growth rate by any margin.

Well if you say that AOB should trade at a PEG of 1 the price today should be $21.4.

I might sell a bit before though  but AOB is really a steal at these levels!

Mike

[stocky]

Doubled my position at 1.8.

[michaeldh]

latest PR...

Westminster Securities Initiates Equity Research Coverage of American Oriental Bioengineering, Inc. (Amex: AOB)
Monday July 18, 5:39 pm ET


ATLANTA, July 18 /PRNewswire/ -- Westminster Securities Corporation has today initiated equity research coverage of Harbin, People's Republic of China-based American Oriental Bioengineering, Inc. (Amex: AOB - News) with a "Strong Buy" investment rating, a six-month Target Price of $ 4.05, a 12-month Target Price of $ 4.50, and a risk rating of "High" over both time periods.